INSEEGO CORP. (INSG) FY 2024 MD&A

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our consolidated financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. This report contains certain forward-looking statements relating to future events or our future financial performance. These statements are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in this report. You are cautioned not to place undue reliance on this information which speaks only as of the date of this report. Except as required by law, we assume no responsibility for updating any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of the important risks related to our business and future operating performance, see the discussion under the caption “Item 1A. Risk Factors” and under the caption “Factors Which May Influence Future Results of Operations” below.

Overview

Inseego Corp. is a leader in the design and development of cloud-managed wireless wide area network (“WAN”) and intelligent edge solutions. Our 5G WAN portfolio is comprised of secure and high-performance mobile broadband and fixed wireless access (“FWA”) solutions with associated cloud solutions for real time WAN visibility, monitoring, automation and control with centralized orchestration of network functions. These devices are specifically built for the carrier, enterprise and small and medium business (“SMB”) market segments with a focus on performance, scalability, quality and enterprise grade security. We also provide a wireless subscriber management SaaS solution for carrier’s management of their government and complex enterprise customer subscriptions.

Our 5G products and associated cloud solutions are designed and developed in the U.S. and are used in mission-critical applications requiring the highest levels of security and zero unscheduled downtime. These products support applications such as business broadband for both mobile and fixed use cases, enterprise networking and software-defined wide area network (“SD-WAN”) failover management.

Inseego is at the forefront of providing high speed broadband through state-of-the-art 5G products and services to keep enterprise and SMB customers seamlessly connected. With multiple first-to-market innovations through several generations of 4G and 5G technologies, Inseego has been advancing wireless WAN technology and driving industry transformations for over 30 years. Our products currently operate on all major cellular networks in the US. Our mobile hotspots, sold under the MiFi ™ brand, have been sold to millions of end users and provide secure and convenient high-speed broadband access to the Internet on the go.

Business Segment Reporting

We operate as one business segment. As of December 31, 2024, the Company’s Chief Operating Decision Maker (“CODM”) was its Executive Chairman. The Company’s Executive Chairman left the Company in February 2025, at which point, the Company’s CODM became its Chief Executive Officer. Neither of these CODMs manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and financial results.

Recent Developments

Divestiture of Telematics Business

As previously noted in Part I. Item 1. Business, on September 16, 2024, the Company and its subsidiary Inseego SA (Pty) Ltd (“Seller”) entered into a Share Purchase Agreement (the “Purchase Agreement”) with Light Sabre SPV Limited (which subsequently novated its benefits and obligations under the Purchase Agreement to Ctrack Holdings (the “Purchaser”)), pursuant to which Inseego agreed to sell to the Purchaser the entire issued share capital of the Company’s Inseego International Holdings Limited subsidiary in exchange for approximately $52 million in cash. Upon completion of the sale, which occurred on November 27, 2024, the Purchaser acquired the Company’s fleet management and telematics solutions business (the “Telematics Business”), which had operations in the United Kingdom, the European Union, Australia and New Zealand. The Purchase Agreement provided for a working capital adjustment, which was determined in December 2024 and funded in January 2025, resulting in an increase to the initial purchase consideration of $0.7 million as a result of changes in closing working capital and net debt.

The Company’s decision to divest its Telematics Business was based on a review of the strategic fit of the business with the Company’s North American-centric 5G wireless solutions business and the Company’s previously stated goal to continue to significantly de-leverage its capital structure. The sale of the Telematics Business further supports the Company’s streamlining of its focus and resources on the strongest growth opportunities around its core product offerings.

The results of operations related to the divested Telematics Business have been classified as discontinued operations within the Consolidated Statements of Operations and Comprehensive Income for all periods presented within the consolidated

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financial statements included in Part IV, Item 15 of this Form 10-K. All discussion below relates to the Company’s continuing operations only, which excludes any results related to the divested Telematics Business, unless noted otherwise.

Debt Restructurings

Throughout the year ended December 31, 2024, the Company entered into a series of repurchase and exchange agreements with various holders of the Company’s 2025 Convertible Notes (as defined below), some of whom were considered related parties of the Company. In summary, as a result of these repurchase and exchange agreements, the company exchanged $146.9 million of outstanding principal of the 2025 Convertible Notes in exchange for $33.8 million of cash, $40.9 million of principal of the 2029 Senior Secured Notes (as defined below), 2.9 million shares of the Company’s common stock, and warrants to purchase an aggregate of approximately 2.5 million shares of the Company’s common stock. These exchanges have significantly improved the Company’s liquidity position.

Factors Which May Influence Future Results of Operations

Revenues. We classify our revenues from the sale of our products and services into two categories: Product Revenue, which consists of our Mobile Solutions and Fixed Wireless Access Solutions, and Services and Other. A description of each of the current revenue classifications is as follows:

Mobile solutions: Our mobile broadband devices, sold under the MiFi brand, are actively used by millions of end users to provide secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks. Our mobile portfolio is supported by our cloud offering, Inseego Connect for device management, whose revenues are included in Services and Other below. Our Mobile Solutions customer base is primarily comprised of mobile operators. These mobile operators include Verizon Wireless, T-Mobile and U.S. Cellular in the United States, Rogers and Telus in Canada, and various companies in other vertical markets.

Fixed wireless access solutions: Our fixed wireless access solutions are deployed by enterprise and SMB customers for their distributed sites and employees as a fully secure and corporate managed wireless WWAN solution. The portfolio consists of indoor, outdoor and industrial routers and gateways supported by our cloud offering – Inseego Connect – for device management. Revenues related to our cloud offerings of Inseego Connect are included within Services and Other below. These devices, sold under the Wavemaker brands, are sold by mobile operators such as T-Mobile, U.S. Cellular and Verizon Wireless along with distribution and channel partners.

Services and Other: A substantial majority of our Services and Other revenue comes from providing a SaaS wireless subscriber management solution (Inseego Subscribe) for carrier’s management of their government and complex enterprise customer subscriptions. Services and Other revenue also includes the Company’s above mentioned Inseego Connect offering. We also categorize non-recurring engineering services we provide to our customers as Service and Other revenue.

We believe that our future revenues may be influenced by a number of factors including:

•deployment of 5G infrastructure equipment;

•adoption of 5G end point products;

•competition in the area of 5G technology;

•acceptance of our products by new vertical markets;

•rate of change to new products;

•economic environment and related market conditions;

•product pricing; and

•changes in technologies.

Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products.

Cost of Revenues. Cost of revenues includes all costs associated with our contract manufacturers, distribution, fulfillment and repair services, delivery of SaaS services, warranty costs, royalties, operations overhead, costs associated with cancellation of purchase orders and costs related to outside services. Also included in cost of revenues are costs related to inventory

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adjustments, as well as any write downs for excess and obsolete inventory and abandoned product lines. Inventory adjustments are impacted primarily by demand for our products, which is influenced by the factors discussed above.

Operating Costs and Expenses. Our operating costs consist of four primary categories: research and development, sales and marketing, general and administrative, and depreciation and amortization costs.

Research and development is at the core of our ability to produce innovative, leading-edge products. These expenses consist primarily of the cost of internal and third-party engineers and technicians who design and test our highly complex products, the procurement of testing and certification services, including prototypes, and other necessary expenditures.

Sales and marketing expenses consist primarily of our sales force and product-marketing professionals. In order to maintain strong sales relationships, we provide co-marketing, trade show support and product training. We are also engaged in a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing. Other marketing initiatives include public relations, seminars and co-branding with partners.

General and administrative expenses include primarily corporate functions such as accounting, human resources, legal, administrative support, information technology, and professional fees. This category also includes the expenses needed to operate as a publicly traded company, including compliance with the Sarbanes-Oxley Act of 2002, as amended, SEC filings, stock exchange fees and investor relations expense. Although general and administrative expenses are not directly related to revenue levels, certain expenses such as legal expenses and provisions for bad debts may cause significant volatility in future general and administrative expenses.

Depreciation and amortization expenses. Our depreciation and amortization expenses primarily include depreciation on our property, plant, and equipment, amortization of capitalized software projects, and amortization of intangibles purchased through acquisitions.

Impairment of capitalized software. Impairment expenses can be recorded on capitalized software intended for internal and external use. Impairments of capitalized software intended for internal use are recorded when the carrying value of the asset group to which the software belongs is not recoverable and exceeds its fair value. Impairments of capitalized software intended for external use are recorded when the net realizable value of the asset falls below its carrying value.

Operating Results. Our results are affected by numerous macroeconomic factors including inflation, consumer spending confidence and global supply chains. The existence of inflation in the U.S. and global economy has resulted in, and may continue to result in, higher interest rates and capital costs, increased costs of labor, fluctuating exchange rates and other similar effects. If the inflation rate continues to increase, it could affect our expenses, especially employee compensation expense. Inflation and related increases in interest rates could also increase our customers' operating costs, which could result in reduced operating budgets. To the extent our products are perceived by customers and potential customers as discretionary, our revenue may be disproportionately affected by delays or reductions in general information technology spending. Such delays or reductions in technology spending are often associated with enhanced budget scrutiny by our customers including additional levels of approvals, cloud optimization efforts and additional time to evaluate and test our products, which can lead to long and unpredictable sales cycles. Such increases have, and may continue to have, a negative impact on the Company’s revenue and profit margins, if the selling prices of products do not increase with the increased costs.

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Results of Operations

The following table sets forth our consolidated statements of operations in dollars (in thousands) and expressed as a percentage of revenues, derived from the accompanying consolidated financial statements for the periods indicated.

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenues. Revenues for the year ended December 31, 2024 were $191.2 million, an increase of $24.0 million, or 14.3%, compared to the same period in 2023.

The following table summarizes revenues by category (dollars in thousands):

Mobile solutions. The $18.4 million increase in Mobile solutions revenues is primarily due to increased sales of our premium 5G MiFi at multiple carriers, including a multi-quarter promotional offer at one of our carrier partners.

Fixed wireless access solutions. The $7.3 million decrease in Fixed wireless access solutions revenues is primarily due to decreased sales with one of our carrier partners, partially offset by increased sales from our channel program.

Services and other. The $12.8 million increase in Services and other revenues is primarily due to increased Inseego Subscribe revenues related to the terms of a two-year service contract renewal with a major customer that commenced in April 2024.

Cost of revenues. Cost of revenues for the year ended December 31, 2024 was $122.4 million, or 64.0% of revenues, compared to $131.5 million, or 78.6% of revenues, for the same period in 2023.

The following table summarizes cost of revenues by category (dollars in thousands):

Product. The $11.8 million decrease in Product cost of revenues is primarily due to significant inventory reserves and related charges that were recorded in 2023, described further below, partially offset by the impact of increased product revenues.

Services and other. The $2.7 million increase in Services and other cost of revenues is primarily due to increased Inseego Subscribe revenues and the related increase in costs incurred to provide these services.

Gross profit. Gross profit for the year ended December 31, 2024 was $68.8 million, or a gross margin of 36.0%, compared to $35.8 million, or a gross margin of 21.4%, for the same period in 2023. The increase in gross profit is primarily due to higher revenues in 2024 and significant inventory reserves that were recorded in 2023. The increase in gross profit margin is primarily due to the inventory reserves recorded in 2023 and a larger proportion of higher margin service revenues as a percentage of total revenues and increased margins on the Company’s premium 5G MiFi offerings in 2024 in comparison to the lower margin products offered in the prior year.

In the year ended December 31, 2023, the Company recorded a write-down of $9.6 million to reflect inventories at net realizable value, in addition to a $1.3 million write-off of capitalized inventory order fees. Further, management accrued an additional $6.8 million in net charges for contract manufacturing liabilities (whose remaining balance is accrued in the Accrued Expenses and Other Current Liabilities) related to excess materials at the contract manufacturers’ sites. All $17.7 million of these charges were recorded in cost of product revenues during the year ended December 31, 2023 and thereby negatively impacted gross profit. Management’s analysis was based on new information that became available during 2023, updated sales projections and other dynamics in the market.

Operating costs and expenses. The following table summarizes operating costs and expenses (dollars in thousands):

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Research and development expenses. Research and development expenses for the year ended December 31, 2024 were $20.6 million, or 10.8% of revenues, compared to $19.7 million, or 11.8% of revenues, for the same period in 2023. The increase in research and development expenses was primarily due to fewer research and development projects that were capitalizable during the year ended December 31, 2024, which resulted in a higher percentage of research and development costs being recorded as operating expenses and increased annual incentive bonus accruals for 2024 performance that were not accrued or paid for in 2023, partially offset by lower personnel-related costs as a result of a decrease in overall research and development headcount and a decrease in consulting and outside services in relation to cost reduction efforts.

Sales and marketing expenses. Sales and marketing expenses for the year ended December 31, 2024 were $16.0 million, or 8.3% of revenues, compared to $16.6 million, or 9.9% of revenues, for the same period in 2023. The decrease in sales and marketing expenses was primarily due to lower overall sales headcount, partially offset by higher commission expenses as a result of higher revenues.

General and administrative expenses. General and administrative expenses for the year ended December 31, 2024 were $17.2 million, or 9.0% of revenues, compared to $15.9 million, or 9.5% of revenues, for the same period in 2023. The increase in general and administrative expense was primarily due to an increase in legal and consulting expenses related to our capital structure management efforts, as well as annual incentive bonus accruals for 2024 performance that were not accrued or paid for in 2023, partially offset by a decrease in share-based compensation expense and temporary employment costs as part of cost reduction efforts.

Depreciation and amortization expenses. Depreciation and amortization expenses for the years ended December 31, 2024 was $12.4 million, or 6.5% of revenues, compared to $18.4 million, or 11.0% of revenues, for the same period in 2023. The decrease in depreciation and amortization expenses was primarily due to lower balances of capitalized software projects and property, plant and equipment during the year ended December 31, 2024 compared to the same period in 2023.

Impairment of capitalized software. For the years ended December 31, 2024 and 2023, we recorded impairments of $0.9 million and $1.1 million, respectively.

Other income (expense). The following table summarizes other income (expense) (dollars in thousands):

* Percentage not meaningful

Loss on debt restructurings, net The $2.9 million net loss on debt restructurings for the year ended December 31, 2024 is a result of the Company’s 2025 Convertible Notes restructurings entered into during 2024 as part of our overall capital structure management efforts, as described below.

Loss on extinguishment of revolving credit facility The $0.8 million loss on extinguishment of revolving credit facility for the year ended December 31, 2024 relates to the voluntary early termination of the Company’s Credit Facility (as defined in Note 6 – Debt in the accompanying condensed consolidated financial statements) in April 2024.

Interest expense, net. The $1.8 million increase in interest expense, net for the year ended December 31, 2024 over the same period in 2023 was primarily a result of the non-cash amortization of the debt discount and coupon interest on the Short-

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Term Loan (as defined below) received in June 2024, partially offset by reductions in the principal balance of the 2025 Convertible Notes and voluntary early termination of the Company’s Credit Facility in April 2024.

Other income (expense), net. Other income (expense), net for the years ended December 31, 2024 and 2023 was $0.9 million and $0.1 million, respectively.

Income tax provision. Income tax provision for the years ended December 31, 2024 and 2023 was a provision of $0.7 million and $0.0 million, respectively.

Income (Loss) from discontinued operations, net of tax Income (Loss) from discontinued operations, net of tax for the years ended December 31, 2024 and 2023 was $18.9 million and $(1.2) million, respectively. The increase was primarily due to the gain on sale recorded upon completion of the divestiture of the Telematics business in 2024.

Preferred stock dividends. During the years ended December 31, 2024 and 2023, we recorded dividends of $3.3 million and $3.0 million, respectively, on our Preferred Stock.

Reverse Stock Split

On January 24, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to January 24, 2024 were automatically converted into one-tenth (1/10) of a share of common stock. The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. All outstanding convertible notes, stock options and RSUs entitling their holders to purchase or obtain or convert into shares of our common stock were adjusted, as required by the terms of these securities. All applicable common share and per share amounts have been retrospectively restated to show the effect of the reverse split.

Liquidity and Capital Resources

As of December 31, 2024, the Company had available cash and cash equivalents totaling $39.6 million. Subsequent to the restructuring transactions described below, the 2025 Convertible Notes had a principal balance of $14.9 million as of December 31, 2024 that matures on May 1, 2025. Additionally, the Company’s new 2029 Senior Secured Notes, which bear interest at 9% payable semi-annually in arrears in May and November, had a principal balance of $40.9 million outstanding as of December 31, 2024.

During 2024, the Company entered into a series of agreements, as part of its overall capital structure management, to reduce its total debt and restructure its outstanding 2025 Convertible Notes. In summary, through various separate transactions executed during 2024, the Company repurchased or exchanged a total of $146.9 million in principal of 2025 Convertible Notes for approximately $33.8 million in cash, $40.9 million in principal amount of the 2029 Senior Secured Notes, 2.9 million shares of the Company’s Common Stock, and warrants to purchase an aggregate of 2.5 million shares of the Company’s Common Stock. See Part IV Item 15 Note 6 – Debt and Note 8 – Stockholders' Equity (Deficit) in the accompanying financial statements for further details regarding the 2029 Senior Secured Notes and related warrants.

The Company generated positive cash flow from operations for both the years ended December 31, 2024 and 2023. In April 2024, the Company received a $15.0 million upfront payment from a customer in connection with a two-year service contract. Based on the factors above, and to reduce financing costs, the Company voluntarily paid-off and terminated its prior revolving credit facility effective April 18, 2024. Additionally, in November 2024, the Company closed the sale of its Telematics Business, resulting in the receipt of cash proceeds of $52.0 million. These factors have had a positive impact on our liquidity.

While the Company’s liquidity and financial results have had several positive developments recently, as noted above, the Company has a history of operating and net losses and overall usage of cash from operating and investing activities. The Company’s ability to maintain profitable operations and continue to generate positive cash flows is dependent upon achieving a level and mix of revenues adequate to support its evolving cost structure. In order to effect the restructuring or refinancing of the Company’s obligations, or if events or circumstances occur such that the Company does not meet its operating plan as expected, or if the Company becomes obligated to pay unforeseen expenditures, the Company may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures, which could have an adverse impact on the Company’s ability to achieve its intended business objectives.

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Our liquidity could be compromised if there is any interruption in our business operations, a material failure to satisfy our contractual commitments, retention of our key existing customers or a failure to generate revenue from new or existing products. If additional funds are raised by the issuance of equity securities, or in connection with any additional debt restructurings or refinancing, Company’s stockholders could experience significant dilution of their ownership interests and securities issued may have rights senior to those of the holders of the Company’s common stock.

Contractual Obligations and Commitments

As of December 31, 2024, our material contractual obligations consisted of the following:

•To mitigate the risk of material shortages and price increases, we enter into non-cancellable purchase obligations with certain key contract manufacturers for the purchase of goods and services in the three to four quarters following the balance sheet date. Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of December 31, 2024, our future payments under these noncancellable purchase obligations were approximately $44.9 million.

•$14.9 million in outstanding principal amount of 2025 Convertible Notes with required interest payments; see Part IV Item 15 Note 6 – Debt;

•$40.9 million in outstanding borrowings under the 2029 Senior Secured Notes; see Part IV Item 15 Note 6 – Debt; and

•Operating lease liabilities that are included on our consolidated balance sheet; see Part IV Item 15 Note 12 – Leases.

Historical Cash Flows

The following table summarizes our consolidated statements of cash flows for the periods indicated (in thousands):

Operating activities.

Net cash provided by operating activities for the year ended December 31, 2024 is comprised of cash flows from continuing operations of $26.7 million and cash flows from discontinued operations of $6.9 million. The cash inflows from continuing operations were primarily related to net cash provided by working capital of $15.5 million and a net loss from continuing operations of $14.4 million that was fully offset by non-cash charges, including depreciation and amortization of $12.5 million, amortization of debt discount and debt issuance costs of $4.4 million, share-based compensation expense of $3.8 million, loss on debt restructurings of $2.9 million, non-cash operating lease expense of $1.0 million, capitalized software impairments of $0.9 million, and a loss on extinguishment of our revolving credit facility of $0.8 million.

Net cash provided by operating activities for the year ended December 31, 2023 is comprised of cash flows from continuing operations of $3.8 million and cash flows from discontinued operations of $2.2 million. The cash inflows from continuing operations were primarily related to net cash provided by working capital of $8.7 million, partially offset by a net

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loss from continuing operations of $45.0 million that was offset by non-cash charges, including depreciation and amortization of $18.7 million, excess and obsolete inventory provisions of $9.5 million, share-based compensation expense of $7.0 million, amortization of debt discount and issuance costs of $2.0 million, write-offs of capitalized inventory fees of $1.3 million, and capitalized software impairments of $1.1 million.

Investing activities.

Net cash provided by investing activities during the year ended December 31, 2024 is primarily comprised of cash flows from discontinued operations of $48.1 million related to the divestiture of the Telematics Business, partially offset by $5.0 million in of cash outflows related to the development of software in support of our products and services and $0.1 million of property, plant and equipment purchases.

Net cash used in investing activities during the year ended December 31, 2023 was primarily comprised of $8.1 million of cash outflows related to the development of software in support of our products and services, $0.2 million of property, plant and equipment purchases, and cash outflows from discontinued operations of $1.8 million.

Financing activities.

Net cash used in financing activities during the year ended December 31, 2024 is primarily comprised of cash outflows of $33.8 million from the repurchases of a portion of our convertible notes, $19.5 million from the full repayment of the Company’s Short-Term Loan and $4.9 million from the voluntary early termination and repayment of our revolving credit facility, partially offset by cash inflows of $19.4 million from the issuance of the Short-Term Loan, net of debt issuance costs.

Net cash provided by financing activities during the year ended December 31, 2023 is primarily comprised of $6.1 million in proceeds from public offerings, partially offset by $3.8 million of cash outflow related to net repayments of our now-terminated revolving credit facility.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, related disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to capitalization and subsequent valuation of externally marketed software development costs and inventory valuation. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.

We believe that the following accounting estimates we have identified as critical involve a greater degree of judgment and complexity than our other accounting estimates. Accordingly, these are the estimates we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations. Refer to Note 1 – Nature of Business and Significant Accounting Policies to our consolidated financial statements included elsewhere in this report for a summary of each of the related accounting policies.

Capitalization and Subsequent Valuation of Externally Marketed Software Development Costs

Estimates in the capitalization and subsequent valuation of externally marketed software development costs involve a significant level of estimation uncertainty include our estimates of what costs are capitalizable and when they’re capitalizable, the proper useful life to amortize capitalized costs over, and the proper valuation of such capitalizable costs at each balance sheet date. These estimates are sensitive to determinations of project progress, expectations of the period over which the software will be sold, as well as forecasts of future demand for the externally marketed software. Any changes to such estimates, for example changes in the expected period over which the software will be sold, impact our consolidated financial results in periods subsequent to determining those estimates.

Inventory Valuation

Estimates in the valuation of inventory that involve a significant level of estimation uncertainty include our estimates of excess and obsolete inventory based on forecasts of future demand for our products in inventory. Any changes to such estimates, for example differences in actual sales versus our estimates of demand, or conversely, the ultimate sell-through of fully reserved inventory for which we did not anticipate any future demand, impact our consolidated financial results in periods subsequent to recording those estimates. Other than our forecasts of future demand, there are no assumptions inherent in our estimates in the valuation of inventory that would result in sensitivity of reported amounts to such assumptions.

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